Memorandum submitted to the Liaison Committee
by Mr Peter Pike MP, Chairman of the Deregulation Committee

Introduction

1. The Liaison Committee, in its First Report
of Session 1999-2000, Shifting the Balance: Select Committees
and the Executive, recommended that all appropriate Select
Committees should produce an annual report. This would cover progress
on past recommendations and any difficulties encountered in the
work of a Select Committee. Deregulation, one of the three scrutiny
committees,[7] is one of
the "cross-cutting" committees which complement the
departmental select committees.

2. Although deregulation activity has been low,
it has nevertheless been an interesting year for the committee,
and in this Memorandum we recount our experiences during session
1999-2000 and the early weeks of session 2000-01, during which
we attempted to conclude business carried over from the earlier
session.

3. My first task as Chairman last session was
to present a Memorandum and give oral evidence to the Procedure
Committee in its enquiry into Delegated Legislation.[8]
The value of the procedure was emphasised, together with statistics
to demonstrate its waning use from the last Parliament to this
(42 Proposals compared with 10) and from the previous sessions
in this Parliament, to the current session (five and four Orders
and one Proposal respectively).

4. It is in response initially to the invitation
to share best practice that the Deregulation Committee has submitted
this Memorandum. Indeed the First Report from the Liaison Committee
(at paragraph 57) refers to the "co-operation between the
Deregulation Committee and the Cabinet Office's Better Regulation
Unit in seeking an effective and workable widening of the deregulation
procedure", and we summarise here our experience of pre-legislative
scrutiny of the draft Regulatory Reform Bill.[9]

5. More generally, however, we continue to express
our regrets that departments have not made better use of these
unique powers, which in themselves encapsulate pre-legislative
scrutiny of draft deregulation orders. The passage of a Regulatory
Reform Act during this session may well release a flood of new
subordinate legislation of this kind in the next Parliament, however.

Pre-legislative scrutiny of the draft Regulatory
Reform Bill

 overview of the timetable

6. The Cabinet Office presented a consultation
paper[10] to the Committee
in March 1999, to which we responded in our First Special Report,[11]
in April 1999. The Government then replied in the summer of 1999
and this was published as the First Special Report,[12]
of Session 1999-2000.

 the informal stage (January-March 2000)

7. In a letter dated 13 January 2000, the Parliamentary
Secretary at the Cabinet Office, Mr Graham Stringer, wrote to
me enclosing a draft Bill, thus honouring the commitment, contained
in the Government's response, "to show the Committee the
draft clauses of the Regulatory Reform Bill if at all possible".5
The Committee duly met to consider the first draft of the Bill
and complied with the Minister's request to provide comments,
which it did by means of a letter from myself, dated 1 February.
We expressed our appreciation of the opportunity to comment on
the draft clauses, and of the fact that a number of earlier comments
had been taken note of and amendments made to the original proposals;
we drew to the Minister's attention continuing concerns and reservations
on specific clauses.

8. Our sister committee in the Lords, the Delegated
Powers and Deregulation Committee (DPDC), had in the meantime
responded to the Minister, with a particular concern about the
breadth of the proposed power to remove "restrictive effects".
The Minister replied to the Commons Committee on 11 February,
dealing with a number of our concerns and explaining that the
"width" of the power contained within the Bill was being
revisited.

9. We then received a further letter on 28 February,
accompanying a second (revised) draft Bill and supporting document.
The Minister also informed us that this current draft was being
put to the DPDC for their consideration. The Deregulation Committee
met and considered the revised draft and I set out our response
in a letter of 9 March, noting that our requested amendments had
not been incorporated into the second draft. This informal phase
is summarised in paragraphs 16-26 of the Second Special Report
of last Session.[13]

 the formal stage (April-July 2000)

10. The next communication was a letter from
the Parliamentary Secretary, informing us that it had been decided
that the Regulatory Reform Bill should be published in draft,
by Command Paper,3 for reference to the Committee and
to the Lords' Committee. The intention was still to introduce
the Bill as soon as parliamentary time allowed, and a report by
19 May was requested. The Minister also responded in detail to
a number of the our concerns.

11. The Committee took evidence from the Parliamentary
Secretary on 9 May. He was accompanied by the Legal Adviser to
the Regulatory Impact Unit and the Head of the Regulatory Reform
Bill team. The evidence session was somewhat disappointing in
its outcome. An undertaking to consider the resolution of outstanding
issues was given by the Minister. These were: the simplification
of the law; the potential for measures taken under a regulatory
reform order to be designated as subordinate provisions orders;
the inclusion on the face of the Bill for the requirement for
regulatory impact assessments and the duty of review and annual
report to Parliament.

12. The Parliamentary Secretary replied to our
concerns in his letter of 11 May, which is appended to the Minutes
of Evidence published with the Second Special Report.7
This reply was not satisfactory, and matters remained unresolved.
We concluded in our Report:

"Overall the draft Regulatory
Reform Bill represents a sensible and welcome step forward in
the process of facilitating greater use of the Deregulation procedure,
which to some extent takes account of our concerns. There remain,
however, a number of points which the Government still needs to
address. If these are not resolved before the formal introduction
of the Bill, we think it likely that we or others will wish to
move amendments in committee to test the points further in debate.
The lengthy consultation process in which we, our counterparts
in the Lords, and the Cabinet Office, have been engaged is a welcome
and healthy example of full pre-legislative scrutiny in action,
and we commend the Ministers concerned for their encouragement
of this process. But it also indicates that there are practical
limits to such scrutiny; some issues remain unresolved, and can
only be resolved when a real Bill is put to the vote in the House."

13. The Parliamentary Secretary replied in a
letter of 28 June 2000 (published as an annex to the Third Special
Report).[14] In addition
to re-affirming his stance on previously discussed matters, he
asked for confirmation that the Committees would be content to
endorse the carry over of consultation in train or completed before
the Bill received Royal Assent. We confirmed that we did not wish
to place any unnecessary hurdle in the way of a proposal or draft
order. This point and our continued disappointment are reflected
in the Third Special Report, published on 11 July.

14. A further informal meeting was held between
Cabinet Office officials and the Legal Adviser and Clerk during
the recess, to discuss a possible procedural solution to allay
the Committee's concerns on the question of subordinate provisions
orders. It was not anticipated that the Minister would write on
this matter; our expectation was that the next development would
be presentation of the Bill.

15. The Regulatory Reform Bill was finally presented,
in the House of Lords, at the beginning of the new Session in
December 2000. The Bill is identical to that published in draft
in April, and takes on board none of the changes proposed during
the formal pre-legislative scrutiny exercise by either ourselves
or the Lords Committee. Although we now have some reason to expect
that concessions may be made before the Bill completes its passage,
this very extended process of consultation demonstrates that there
is a limit to the extent that Government will yield, once its
proposals are made public; and that, whatever the aspirations
of the Whips, pre-legislative scrutiny does not obviate the need
for thorough scrutiny of the resulting Bill by the two Houses.

Use of the Deregulation Powers

 experience in this session

16. It has been another disappointing year for
the Committee. We were promised a number of proposals for draft
orders earlier in the session, but these have not materialised,
and we have not been given any explanation for their delay, although
it is reasonable to assume that a number of Departments may be
waiting for the wider powers which will become available under
the new Bill.

17. There have been a number of PQs  initially
a flurry in late January, put down by Mrs Curtis-Thomas, asking
individual Departments what orders each had made under the Deregulation
and Contracting Out Act (DCOA) 1994, and requesting information
on plans to introduce further orders. No specific plans were mentioned
in any of the replies but a bland assurance "to continue
to look for opportunities to use such orders to remove unnecessary
restrictions" featured in some of the written answers. On
17 November[15] the Minister
replied to a Written Question put down by Mr Bercow, requesting
information on the numbers of deregulation orders passed in the
last three years. The reply was that there had been 12 in 1997,
five in 1998 and four in 1999.

18. The dearth of proposals in this session cannot
be attributed solely to uncertainty and reluctance to proceed
in the interim. The Cabinet Office emphasised that it was "business
as usual" whilst awaiting introduction of the draft Bill
and receipt of Royal Assent, and made clear that consultation
in process under the current Act could be carried over and resulting
proposals for orders considered within the expanded order-making
power.

19. Moreover the under-use of the power gives
weight to the Committee's recommendation that there should be
a duty of annual review of the powers.

Sunday Dancing and Licensing

20. Although we have considered only one proposal
for a deregulation order in this session , it covered the somewhat
controversial subject of Sunday Dancing and Licensing, some aspects
of which the previous committee had considered.[16]
That proposal was rejected at the time primarily on the grounds
of inadequate consultation.

21. We duly considered the current proposal (reporting
on 14 March 2000)[17]
where our main concern was the necessary protection of residents.
Further written evidence was taken and our counterparts in the
Lords also took oral evidence from the Leader of the London Borough
of Kensington and Chelsea accompanied by officials, and Home Office
officials in a joint session. The upshot of this was a recommendation
from the Lords Committee[18]
that the draft order be amended to make the proposed changes to
the licensing arrangements (special hours certificates) subject
to an "opt-in" provision: in other words, a Local Authority
would determine whether the provisions should apply within its
boundaries, and would effectively have a veto over extended licensing
hours on Sunday nights.

22. Although this seemed an eminently practical
solution to the dilemma of balancing the differing interests,
we took the view in paragraphs 44-49 of our Report11
that such an "opt-in" arrangement was almost certainly
ultra vires, in that it would constitute a sub-delegation
of powers. The Lords Committee, however, in their Report of 15
March,12 made it clear that the Order would be rejected
if it were not amended to allow for the "opt-in".

23. This left the Home Office with a dilemma.
It is also worth pointing out that a White Paper on Licensing[19]
was presented in April 2000. One facet of licensing covered was
new arrangements for "an accountable licensing authority".
The White Paper said;

"The Better Regulation
Task Force favoured the new joint responsibility going to the
local authorities, on the grounds that licensing is not a judicial
function."

24. We had expected that the Home Office would
have given priority to the resolution of this matter and would
have ensured timely laying of a draft order. We had given it fair
wind, having asked only for the eligibility of residents to apply
for revocation of Special Hours Certificates and for improved
guidance on the "special nature of Sundays".

25. In the event, despite prompting for the laying
of the Order by both the Lords Chairman, Lord Alexander of Weedon,
and myself, in letters exchanged between July and November, a
complete order was not laid and on 28 November, three days before
Prorogation, we received the draft Deregulation (Sunday Dancing)
Order. The draft Order covered only the provisions of the Sunday
Observance Act 1780 and did not include the licensing provisions.
Subsequently, on 8 December, the licensing part of the proposal
was laid, in the form of the draft Deregulation (Sunday Licensing)
Order 2000.

26. We considered the two draft Orders on 12
December, and unanimously recommended[20]
that they should be approved, although we drew attention to the
fact that the Orders had been laid so late, that, contrary to
earlier expectations, they would have minimal effect on the opening
hours of licensed premises on this New Year's Eve, which falls
on a Sunday.

27. The Motion for the approval of the Deregulation
(Sunday Dancing) Order was tabled in the Commons on 18 December
and the debate on the Order scheduled for 21 December in the Lords.
The Home Office took the decision, despite the haste with which
the Deregulation (Sunday Licensing) Order was laid, to delay the
tabling of the Motions for the approval of this Order in the two
Houses until the New Year.

The Lords and the Commons Committees

28. Our Standing Orders provide for the communication
of "its evidence and any other documents relating to matters
of common interest ... and to any committee appointed by the Lords
to examine deregulation proposals and draft orders and any sub-committee
thereof."[21] We
have found this exchange of papers of great benefit in considering
both the draft Regulatory Reform Bill and the Sunday Dancing and
Licensing Proposal.

29. The Standing Orders also allow for joint
meetings with the Lords DPDC. We have not felt it necessary to
do so in this session, given the exchange of papers.

Future use of the deregulation process

30. On 27 November[22]
the Parliamentary Secretary was asked to state what proposals
the Government planned to bring forward under the wider powers
of the Regulatory Reform Bill, and an impressive and interesting
list, from fire safety through constraints on professional partnerships
to further deregulation of licensing, was set out. On the same
day, I received a letter from the Parliamentary Secretary, setting
out the list and expressing his hope that the Bill would be introduced
in the near future. He also expressed his thanks for the constructive
role played by the Committee, in ensuring that the draft Bill
had undergone an exceptional level of scrutiny.

31. The Cabinet Office released a press notice
on the same day, covering the meeting held by the Prime Minister
with entrepreneurs, in which he announced a package of business-friendly
initiatives, in which some 20 reforms would be delivered by regulatory
reform orders; and the Minister for the Cabinet Office, Mo Mowlam,
listed the benefits of the process, emphasising that regulatory
reform orders were subject to thorough public consultation and
rigorous Parliamentary scrutiny.

32. Assuming that the Regulatory Reform Bill
receives Royal Assent in the early Spring, there now seems good
reason to anticipate a significant increase in activity, and in
respect of a range of rather more significant legislative proposals.
A number of changes to the Committee's order of reference will
be necessary, and others desirable, following the passage of the
Bill, and the Committee will make recommendations to that end
in the New Year.